China Stocks Jump, Led by Financial Companies on Obama Victory

By Zhang Shidong

Nov. 5 (Bloomberg) -- China's stocks rose the most in six weeks, led by financial and energy companies, on speculation Barack Obama will take steps as U.S. president to bolster the world's largest economy and as oil and metals prices jumped.

China Merchants Bank Co. surged by the 10 percent limit on speculation an economic stimulus plan backed by Obama will boost lending to manufacturers in China who sell 20 percent of overseas shipments in the U.S. Jiangxi Copper Co., China's No. 2 producer of the metal, gained 6.4 percent. China Shenhua Energy Co., the nation's largest coal miner, climbed 6 percent.

``Obama will take a more pragmatic and active approach to tackling the financial crisis and bolstering the economy than McCain,'' the Republican candidate in the election, said Wu Youhui, a strategist at GF Securities Co. in Guangzhou. ``That will benefit China's growth, especially its exports.''

The CSI 300 Index, tracking yuan-denominated A shares on China's two exchanges, gained 71.67, or 4.4 percent, to 1,699.43 as of 1:15 p.m. local time, the biggest advance since Sept. 22. The measure dropped to 11.4 times reported earnings yesterday, the cheapest since the index was created in 2005.

``Valuations of the overall market are pretty low and attractive now,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai, which manages the equivalent of about $850 million. ``Investors are expecting some policy changes from the U.S. that can help to buoy China's economy.''

Merchants, ICBC

Merchants Bank, the nation's biggest dual-currency credit- card issuer, advanced 10 percent to 12.76 yuan. Industrial & Commercial Bank of China Ltd., the nation's biggest listed lender, rose 4.3 percent to 3.85 yuan. Ping An Insurance (Group) Co., China's second-biggest insurer, gained 6.9 percent to 25.43 yuan.

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, rose 3.9 percent to 1,772.34. The Shenzhen Composite Index added 3.3 percent to 472.11.

Democrat Barack Obama, elected the 44th U.S. president, has urged Congress to pass an economic stimulus bill immediately after the election. The Standard & Poor's 500 index climbed 4.1 percent yesterday, the biggest presidential election day rally in 24 years. Most Asian markets jumped and the dollar gained against the euro.

China-U.S.

``Long-term healthy and stable development of the China-U.S. relationship is of great significance for the promotion and maintenance of world peace, stability and development,'' President Hu Jintao told Obama in a telephone call today, according to a statement on the Ministry of Foreign Affairs Web site.

Obama's overwhelming victory, combined with enlarged majorities in the U.S. House of Representatives and Senate increased speculation that the arms of government will unite in accelerating policies aimed at overcoming recession.

Global financial market turmoil originating in the U.S. subprime mortgage crisis helped to drive the CSI 300 68 percent lower this year, making China Asia's worst-performing benchmark index. Obama's support for a moratorium on home foreclosures and a congressional plan to encourage lenders to refinance troubled loans may help to speed a revival in credit markets.

Economy

China's economy grew at the slowest pace in five years in the three months through September as export orders shrank and industrial production waned. The expansion cooled for a fifth straight quarter, to a 9 percent gain from a year earlier.

On Nov. 2, the central bank scrapped curbs on loans after three interest rate cuts in seven weeks failed to revive economic growth.

Jiangxi Copper rose 6.4 percent to 9.01 yuan. Shenhua gained 6 percent to 18.21 yuan. Tongling Nonferrous Metals Group Co., China's biggest copper producer, added 6.2 percent to 6.19 yuan. Datong Coal Industry Co., China's second-largest coal company by capacity, advanced 5 percent to 11.90 yuan.

Crude oil for December delivery rose 10 percent to $70.53 a barrel in New York, the biggest one-day gain since Sept. 22. Copper added 6.4 percent, while nickel surged 8.1 percent as the dollar weakened against global currencies.

The following companies were among the most active in China's markets. Stock symbols are in brackets after companies' names.

Air China Ltd. (601111 CH), the nation's largest international carrier, added 0.10 yuan, or 2.9 percent, to 3.51. Air China said it will issue bonds worth as much as 6 billion yuan ($878 million) to increase working capital.

China International Marine Containers Co. (000039 CH), the world's largest maker of shipping containers, rose 0.23 yuan, or 3.7 percent, to 6.47. The company said it bought a 10 percent stake in Yantai Raffles Shipyard Ltd. for 445 million kroner ($68 million). The transaction was completed on Nov. 3, it said.

Sinochem International Corp. (600500 CH), a unit of China's biggest chemicals trader, advanced 0.33 yuan, or 5.4 percent, to 6.49. Sinochem said it held a 29.19 percent stake in Nantong Jiangshan Agrochemical & Chemicals Co. (600389 CH), becoming the largest shareholder. Jiangshan jumped 0.66 yuan, or 7 percent, to 10.15.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net